Financial Review: WK Kellogg (NYSE:KLG) and RH (NYSE:RH)

WK Kellogg (NYSE:KLG) and RH (NYSE:RH) are both consumer staples companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, institutional ownership, valuation, risk and dividends.

Profitability

This table compares WK Kellogg and RH’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
WK Kellogg	1.31%	31.34%	5.18%
RH	3.20%	-113.58%	3.08%

Volatility and Risk

WK Kellogg has a beta of 0.24, suggesting that its stock price is 76% less volatile than the S&P 500. Comparatively, RH has a beta of 2.23, suggesting that its stock price is 123% more volatile than the S&P 500.

Institutional & Insider Ownership

95.7% of WK Kellogg shares are held by institutional investors. Comparatively, 90.2% of RH shares are held by institutional investors. 2.2% of WK Kellogg shares are held by company insiders. Comparatively, 27.0% of RH shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for WK Kellogg and RH, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WK Kellogg	2	9	0	0	1.82
RH	4	7	10	0	2.29

WK Kellogg currently has a consensus price target of $20.88, suggesting a potential downside of 9.24%. RH has a consensus price target of $259.29, suggesting a potential upside of 25.04%. Given RH’s stronger consensus rating and higher probable upside, analysts plainly believe RH is more favorable than WK Kellogg.

Earnings & Valuation

This table compares WK Kellogg and RH”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
WK Kellogg	$2.61 billion	0.76	$81.00 million	$0.37	62.16
RH	$3.18 billion	1.22	$72.41 million	$5.37	38.62

WK Kellogg has higher earnings, but lower revenue than RH. RH is trading at a lower price-to-earnings ratio than WK Kellogg, indicating that it is currently the more affordable of the two stocks.

Summary

RH beats WK Kellogg on 9 of the 14 factors compared between the two stocks.

About WK Kellogg

WK Kellogg Co operates as a food company in the United States, Canada, and the Caribbean. It manufactures, markets, and distributes ready-to-eat cereal products primarily under the Frosted Flakes, Special K, Froot Loops, Raisin Bran, Frosted Mini-Wheats, and Kashi brands. The company was formerly known as North America Cereal Co. and changed its name to WK Kellogg Co in March 2023. The company was incorporated in 2022 and is headquartered in Battle Creek, Michigan.

About RH

RH, together with its subsidiaries, operates as a retailer in the home furnishings market. The company offers products in various categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, baby, child, and teen furnishings. It provides its products through rh.com, rhbabyandchild.com, rhteen.com, rhmodern.com, and waterworks.com online channels, as well as operates RH Galleries, RH outlet stores, RH Guesthouse, and Waterworks showrooms in the United States, Canada, the United Kingdom, and Germany. The company was formerly known as Restoration Hardware Holdings, Inc. and changed its name to RH in January 2017. RH was incorporated in 2011 and is headquartered in Corte Madera, California.